Illusion Vs. Reality In Argentina

The reported 42% jump in manufacturing productivity is a questionable figure ("Will Argentina stay the course?" International Business, Oct. 10). A large subsector of manufacturing is assembling imported parts, making it easy to show large increases in production with little local value added. The import of auto parts, for instance, is strongly fostered by the overvalued peso. But cars are selling in the highly protected internal market at prices that treble U.S. prices. Argentina is in a bubble of peso overvaluation, and the evidence is the huge balance-of-payments deficit and the low level of real salaries in manufacturing--75% of their 1980 level and still declining.

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